Planner’s take on Senate Bill 1

Legislation could create successor agencies to redevelopment, focusing on transit-oriented and walkable communities.

In 2011, Governor Jerry Brown snuffed out California’s plethora of community redevelopment agencies (CRA), much to the lament of cities and their city planners everywhere. The Los Angeles Times Editorial Board recently wrote that city’s lament their loss primarily out of self-interest; stating that the structure of CRAs allowed them to self finance – giving lots of money back to the city. Planners, on the other hand, lamented their fall for a more practical planning reason: Redevelopment agencies were one of the great tools planners could use to assemble land in a manner that made development more feasible with tax-increment financing. So when California State Senator, Derrel Steinberg proposed SB 1 to create CRA’s successor agencies, tentatively known as Sustainable Community Investment Authorities (SCIA), planners took note. It was the first time we had heard of a serious attempt to restore one of the great planning tools we had lost. But how well can it work?

The goal of the original CRAs was to help build affordable housing to be built in infill blighted areas of a city’s core in post-war urban America. As stated by the LA Times, this focus was largely lost, leading to the CRAs eventual demise. SB1 creates new agencies with a new, more modern focus. SCIA would focus on transit-oriented and walkable communities, as well as an emphasis on facilitating clean energy manufacturing and affordable housing in those transit-oriented and walkable areas. The real question is whether or not SB1 can not simply replace CRAs, but do so in a manner that resurrects the original goal of CRAs with this modern emphasis.

To begin, Old CRAs were often criticized for fudging what constituted blight, leading to development projects in areas that you would hardly think needed the extra financial help. SB1 removes the potential for fudging what constitutes “blight”. The bill as written requires SCIAs to use the state definition of blight. California law defines blight in Sections 33030 and 33031 of the Health and Safety Code.

Second, SB 1 rightfully puts focus on the issue of transit oriented communities and development projects, walkable neighborhoods, as well as restoring that all-important tax-increment financing mechanism enjoyed by planners and developers everywhere. It also addresses a key issue among transit-oriented developments: parking. SB 1 requires a sustainable parking strategy that allows for a more lax parking requirement and encourages people to take transit, thus avoiding the dubious label of “Transit Adjacent Development”. Developers should enjoy this as onerous parking requirements, especially in places like Los Angeles, often eat up usable and sellable square footage. This not only improves their projects but offers potential to have the overall cost of housing at the project lowered. (See my previous post on how cost of housing is related to development costs).

Third, it establishes accountability of the proposed SCIAs that was absent from the old CRAs. Each Sustainable Community Investment Area (Area) is required to submit a Sustainable Community Investment Plan (Plan). The plan is very similar to sections of an environmental impact report required under CEQA. The plan must not only go over a fiscal analysis, but include the goals and objectives and how the project (or Area) relieves blight. The Plan is required to identify the following:

How it implements the goals

How it contributes to more efficient transportation

How it will contribute to a reduced cost for the combined costs of housing and transportation for residents

How it will improve public health

How it will promote more efficient water consumption

How it will avoid loss of farmland

How it will reduce air pollution, energy consumption, and greenhouse gas emissions by reducing vehicle miles traveled

How it will reduce energy consumption by facilitating clean energy manufacturing

How it will ensure compliance with affordable housing maintenance and preservation requirements of SB1

How the plan will implement the jobs plan of SB1

SB1 also requires the SCIA contract an independent financial and performance auditor, who performs his/her audit based on standards set by the State Controller. This audit is required to be conducted every five years.

Finally, SB1 rightfully exempts potential projects from many aspects of CEQA so long as these projects are taking place in jurisdictions that have already gone through an EIR process for a planning level decision. A planning level decision is defined as the enactment of a general plan, community plan, specific plan, or zoning code. Given the passage and requirements of SB 375, planning level decisions across California have already been enacted or are currently underway. So by the time any SCIAs come around, much of California will be blanketed by the SB1s protection for SCIA projects.

Having said the above, we also must explore some of the shortfalls of SB1, as either public policy or practicality.

Cheap Housing vs. Affordable Housing

One of the big critiques towards affordable housing proponents is the difference between “cheap” housing and “affordable” housing. Cheap housing is, essentially, the dilapidated home that the target demographic for affordable housing is currently living in. However, the issue arises when you begin to discuss redevelopment. No new affordable housing development is going to be as affordable as the cheap housing that was replaced. As a result, you end up with the aspect of gentrification that critics often cite: wealthier residents (not to be confused with “wealthy residents”) move into the affordable housing that they can now afford while the poor, who lived in the cheap housing, are now forced out because they still cannot afford the new affordable housing. The new SCIAs do very little to address this issue.

The little that SB1 does is that two fold. First, SCIAs can help increase the stock of housing in a neighborhood. And with the lower housing costs (lower vs. non-designated affordable housing), it can apply a downward pressure on other comparable housing, making it more affordable, though still missing the bloc of original residents.

Second, SB1 does requires that extremely-, very-, and low-income households that were removed to make room for new developments be replaced, which is in response to concerns like mine above. However, where this becomes a problem is in the question of where do developers replace those housing units. Section 33413 of the Health and Safety Code states that they need to be replaced in the area under the jurisdiction of the agency. This may work because of the financial benefits given to developers in an Area; allowing them to create these very affordable units while still allowing the overall project to be financially feasible, unlike inclusionary housing standards which put the burden of providing affordable housing on the developer. However, more details need to be fleshed out for this to be understood. If the cost of developing replacement housing becomes too onerous, then developers may forego Areas all together. But this is something that will need real world testing to truly see how it plays out in different housing markets.

Sustainable Communities for the Wealthier

The sad truth about our market economy is that the more popular something is, the more money it costs. This is reflected in real estate through property values. Though sustainable communities are great and advocated by many planners, the issue here is less over the validity of sustainable, walkable, transit-oriented communities and more over the socio-economic impact of this type of planning and real estate.

Properties located along transit corridors or near transit stops are already becoming very popular in California cities, largely due to an increase of awareness of environmental impacts and changing tastes and preferences of younger generations. As a result, developers are buying up land near potential or existing transit sites and building on their own. When completed, however, these units often cost more. This is due in large part to the high property values these sites enjoy because they are so close to transit sites. (Again, see my previous post on how cost of housing is related to development costs.)

Further, walkable communities are also quite popular among the same demographics. People are looking for that type of community now when looking to rent or own their next home. This too increases the cost of housing. Look at any existing walkable community and compare the cost of housing there to a community that is not as walkable. The difference in cost is already visible.

So as we look at proposed Areas, as proposed in SB 1, we have to ask ourselves if we are actually creating more housing that is affordable in blighted areas or if we are simply perpetuating the increased property values of communities that already are popular, or will be even if left to pure market economics.

Still Too Easy to Challenge?

In the “well done stuff” section, I state that it is a strength that the law somewhat exempts SCIA projects from many of CEQAs requirements, thus eliminating the almost certain challenges that accompany any big development project. Further, the accountability requirements of the Plan are commendable. But can this also be a weakness? The issue here is the extent to which you can challenge a Plan proposed by a SCIA.

Again, the new language helps to exempt many potential projects from CEQA requirements and ensuing litigation from challenges. This helps to move projects along more quickly and for less money, which helps reduce the final cost of the project and cost of housing. However, because the new accountability requirements require an accountability on things like traffic; to what extent can these Plans be challenged in court? Have we simply replaced the potential for litigation under CEQA to litigation under the Plan? SB1 does little in terms of language to indicate how this could play out. And absent any real-world examples, it is difficult to guess how it would play out from our end. Nevertheless, it could be an improvement to the bill to more clearly establish the extent to which a Plan can be publicly challenged.

Overall

Overall, Senator Steinberg’s proposal is an excellent step towards creating a successor agency to the now defunct CRAs. It not only succeeds them, but improves upon many of CRAs flaws that eventually led to their demise. However, despite its great step forward, there are still issues we need to explore as public policy and what we can practically expect from developers, who are, in the end, fronting the bill for infill. Nevertheless, I believe that we should continue to be excited for how we will approach planning and development in the future. SB1 is part of that.

Roobs is a urban planner in Los Angeles where he focuses on land use issues and policy. He received his Master’s in Urban & Regional Planning from UCLA with concentrations in Urban Design and Transportation. He received his Bachelors from UC Berkeley in Legal Studies and Sociology.